Banking Article, Banking Finance 2022, Banking Finance February 2022

Agriculture Infrastructure Fund Scheme: Opportunities to finance


The role of infrastructure is crucial for agriculture development and for taking the production dynamics to the next level. It is only through the development of infrastructure, especially at the post-harvest stage that the produce can be optimally utilized with opportunity for value addition and fair deal for the farmers. Development of such infrastructure shall also address the vagaries of nature, the regional disparities, development of human resource and realization of full potential of our limited land resource.

In view of above, the Hon’ble Finance Minister announced on 15.05.2020, Rs 1 lakh crore Agri Infrastructure Fund for farm-gate infrastructure for farmers. Financing facility of Rs. 1,00,000 crores will be provided for funding Agriculture Infrastructure Projects at farm-gate & aggregation points (Primary Agricultural Cooperative Societies, Farmers Producer Organizations, Agriculture entrepreneurs, Start-ups, etc.). Impetus for development of farmgate & aggregation point, affordable and financially viable Post Harvest Management infrastructure.

Accordingly, Department of Agriculture Co-operation and Farmers Welfare (DAC&FW) has formulated the Central Sector Scheme to mobilize a medium – long term debt financing facility for investment in viable projects relating to postharvest management Infrastructure and community farming assets through incentives and financial support.

Objectives of Scheme:

  1. Farmers (including FPOs, PACS, Marketing Cooperative Societies, Multipurpose cooperative societies):
  • Improved marketing infrastructure to allow farmers to sell directly to a larger base of consumers and hence, increase value realization for the farmers. This will improve the overall income of farmers.
  • With investments in logistics infrastructure, farmers will be able to sell in the market with reduced post-harvest losses and a smaller number of intermediaries.
  • Community farming assets for improved productivity and optimization of inputs will result in substantial savings to farmers.

     2. Government

  • Government will be able to direct priority sector lending in the currently unviable projects by supporting through interest subvention, incentive and credit guarantee. This will initiate the cycle of innovation and private sector investment in agriculture.
  • Due to improvements in post-harvest infrastructure, government will further be able to reduce national food wastage percentage thereby enable agriculture sector to become competitive with current global levels.
  • Central/State Government Agencies or local bodies will be able to structure viable PPP projects for attracting investment in agriculture infrastructure.

      3. Agri entrepreneurs and startups:

  • With a dedicated source of funding, entrepreneurs will push for innovation in agriculture sector by leveraging new age technologies including Internet of things (IoT), Artificial Intelligence (AI), etc.
  • It will also connect the players in ecosystem and hence, improve avenues for collaboration between entrepreneurs and farmers.

      4. Banking ecosystem:

  • With Credit Guarantee, incentive and interest subvention lending institutions will be able to lend with a lower risk. This scheme will help to enlarge their customer base and diversification of portfolio.
  • Refinance facility will enable larger role for cooperative banks and RRBs.


With reduced inefficiencies in post-harvest ecosystem, key benefit for consumers will be a larger share of produce reaching the market and hence, better quality and prices. Overall, the investment via the financing facility in agriculture infrastructure will benefit all the eco-system players.

Implementation Period of Scheme:

The Scheme will be operational from 2020-21 to 2029-30. Disbursement in four years starting with sanction of Rs. 10,000 crores in the first year and Rs. 30,000 crore each in next three financial years. Moratorium for repayment under this financing facility may vary subject to minimum of 6 months and maximum of 2 years.

Government Budgetary Support:

  1. Interest Subvention Cost: All loans under this financing facility will have interest subvention of 3% per annum up to a limit of Rs. 2 crores. This subvention will be available for a maximum period of 7 years. In case of loans beyond Rs.2 crore, then interest subvention will be limited up to 2 crores. The extent and percentage of funding to private entrepreneurs out of the total financing facility may be fixed by the National Monitoring Committee.The subvention will be available for a maximum period of seven years which also includes moratorium period. (Overall availability for subvention is 07 years).
  2. Credit Guarantee Cost: Credit guarantee coverage will be available for eligible borrowers from this financing facility under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme for a loan up to Rs. 2 crores. The fee for this coverage will be paid by the Government. In case of FPOs the credit guarantee may be availed from the facility created under FPO promotion scheme of DACFW.
  3. Administration Cost of Project Monitoring Unit (PMU): Farmers Welfare Programme Implementation Society under DACFW will provide PMU support to the scheme at the central level and state PMUs of PM KISAN at state level. Services of knowledge partners will be engaged to identify clusters including export clusters and gaps in supply chains to target projects and prepare viable project reports to support the beneficiaries.

Eligible projects:

The scheme will facilitate setting up and modernization of key elements of the value chain including

(A) Post Harvest Management Projects like:

  • Supply chain services including e-marketing platforms
  • Warehouses
  • Silos
  • Pack houses
  • Assaying units
  • Sorting & grading units
  • Cold chains
  • Logistics facilities
  • Primary processing centers
  • Ripening Chambers

(B) Viable projects for building community farming assets including –

(i) Organic inputs production

(ii) Bio stimulant production units

(iii)Infrastructure for smart and precision agriculture

(iv)Projects identified for providing supply chain infrastructure for clusters of crops including export clusters

(v) Projects promoted by Central/State/Local Governments or their agencies under PPP for building community farming assets or post harvest management projects

Eligible beneficiaries:

  • Primary Agricultural Credit Societies (PACS)
  • Marketing Cooperative Societies
  • Farmer Producers Organizations (FPOs)
  • Self Help Group (SHG)
  • Farmers
  • Joint Liability Groups (JLG)
  • Multipurpose Cooperative Societies
  • Agri-entrepreneurs, Startups and Central/State agency or Local Body sponsored Public Private Partnership Projects.
  • The eligibility has now been extended to State Agencies/Agriculture Produce Marketing Committee (APMCs), National & State Federations of Cooperatives, Federations of Farmers Producers Organizations (FPOs), and Federations of Self-Help Groups (SHGs).

PACS who have adopted digitization for handling its operations will be given preference under this scheme. The scheme is limited to primary processing units. Advanced processing activities are not a part of the scheme. However, some components of such processing units such as warehouse, cold storages, pack-houses, collection centers etc. can get benefit of agriculture infrastructure fund.

Participating institutions:

All scheduled commercial banks scheduled cooperative banks, Regional Rural Banks (RRBs), Small Finance Banks, Non-Banking Financial Companies (NBFCs) and National Cooperative Development Corporation (NCDC) may participate to provide this financing facility, after signing of Memorandum of Understanding (MoU) with National Bank for Agriculture & Rural Development (NABARD)/DAC&FW.

Project Management and handholding support:

An online platform ( will be made available in collaboration with participating lending institutions to provide information and loan sanctioning facility. Agri Infra fund will be managed and monitored through an online MIS platform. It will enable all the qualified entities to apply for loan under the fund. The system will also provide benefits such as transparency of interest rates offered by multiple banks, scheme details including interest subvention and credit guarantee offered, minimum documentation, faster approval process as also integration with other scheme benefits.Loan can be availed through offline mode, but it is mandatory for lending institutions to make its entry on the online platform in due course of time to get the benefits of AIF.

Rate of interest:

The cap on lending rate of up to Rs 2.00 Cr. (Rupees two crore) will be 06 monthly/ Annual MCLR plus 100 basis point (floating) subject to maximum 9.00 percent (Nine percent per annum) for all eligible projects.


Any grant or subsidy available under any present or future scheme of Central/State government can be availed for projects under this financing facility. In cases of capital subsidy such amount shall be considered as promoter’s contribution. However, a minimum of 10% of the project cost shall be mandatory as promoter’s contribution.

Process flow of the scheme:

  1. The applicant will register on the online portal ( after which he/ she will receive registration credentials
  2. After getting credentials, beneficiary can apply for loan through the online portal by filling an application form available on the portal.
  3. Along with the application soft copy of Detailed Project Report (DPR) and related documents will be uploaded on the portal by applicant.
  4. This application along with DPR will then be forwarded to the lending institution opted by the applicant for appraisal.
  5. The lending institute will appraise the project and decide whether to sanction the loan or reject the application based on viability of project.
  6. Once the loan is sanctioned then funds will be transferred directly to the bank account of the beneficiary.
  7. After the disbursal of loan to beneficiary by lending institute, interest subvention and credit guarantee fee will be released by GOI to the lending institute and CGTMSE respectively.


This scheme will make farmers independent and improve access to market. With modern packaging and cold storage system access, farmers will be able to further decide when to sell in the market and improve realization.

Infrastructure at the farm gate is created through this scheme. It is providing a medium – long term debt financing facility for investment in viable projects for post-harvest management Infrastructure and community farming assets through interest subvention and financial support for credit guarantee.

With extension of eligibility to State Agencies/APMCs, National & State Federations of Cooperatives, Federations of Farmers Producers Organizations (FPOs), and Federations of Self-Help Groups (SHGs) not only will the APMC be empowered but it will increase employment opportunities and more and more people will be benefited. APMC markets are set up to provide market linkages and create an ecosystem of post-harvest public infrastructure open to all farmers.

This scheme will help to achieve a multiplier effect in generating investments. The benefits reach small and marginal farmers also.It is generating new employment opportunities and strengthen the rural economy. There is huge opportunity to finance under agriculture infrastructure fund scheme which will accelerate creation of many infrastructure projects such as cold storage, collection centres, processing units so that the hardworking farmers can get the true value for their produce.

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